Creating a Fake Reputation

It’s been a while since we did a scam post.  Fake reputation scams happen on-line and off-line and can be one of the toughest frauds to detect or avoid.

On E*Bay it’s well known that malicious users will build up a reputation by selling small, inexpensive items (paperback books are popular) or by running an honest-to-goodness real E*Bay store.  They will follow through with the transactions and get a large amount of positive feedback.  Then they make a number of fraudulent auctions / sales and not fullfill any of them.

One of the worst (or best depending on your perspective) parts of electronic commerce is you can usually abandon an identity.  This allows the scammers to then start doing the exact same thing again under another name.

Off-line a friend of one of my relatives got burned by the real-life version of this.  He ran a computer business, and started doing business with a man for the first time.  They did a sequence of transactions, each larger than the last.  Each time there would be something unusual about the transaction, but it would work out, and he would get paid.

It turned out the con man was feeling him out, determining what he could get away with, and the maximum order size the friend could handle.  Eventually it was time to pull the trigger and the con-man managed to make off with dozens of computers without paying for them.  It destroyed the computer store owner, who abandoned his business (and his marriage) and basically had a nervous breakdown where he wandered the continent sleeping in the back of his SUV.  He was talking at one point about trying to hire a hit man, which luckily friends talked him out of.

Since these sorts of scams work by gaining our trust, there’s no sure-fire way to prevent it other than to be suspicious of everyone (which would cause its own problems).  When the friend who got conned was relating the experience to me, he remembered clearly that with each deal it seemed a bit funny.  It can be a hard thing to say “no” to someone, or to admit that we don’t understand a deal that’s being proposed.  Some people will prey on this reaction to try and take advantage.

When I was trying to rent my condo, a man showed up who was interested in a rent-to-own and we talked about that extensively (he was going to do a sandwich lease where he rents-to-own from me, then rents to his own tenant).  Discussing the details, he was very accommodating (and tried to buy me dinner).  Later, he tried to change elements of the deal that he had previously agreed on.  When I pointed out that what he was saying was different than what he’d previously agreed to, his response was “I have to admit I love the way you think , very detailed too detailed at times , just kidding” (notice that in the same sentence he’s complimenting me, then telling me that I’m “too detailed”).  He told me about 5 times that he didn’t think we should involve lawyers in the transaction (and I told him 5 times that I’d be involving a lawyer in the transaction and encouraged him to do the same).  Throughout our interactions, he also told me repeatedly how much he liked me (while it’s true that I *AM* a very likable guy, it’s just creepy to say it out loud).  I kept asking him questions and he eventually told me it was “none of my business” (when I’d asked him who he was planning to rent to).  This was enough red flags for me at that point that I just killed the deal and kept looking for a normal tenant.  I could be wrong and maybe everything would have worked on with the rent-to-own guy, but I hasn’t regretted for 1 second walking away from it.

Years ago when I went backpacking across Europe an aunt told me to trust my feelings and if I was getting a bad vibe about a person or situation to just leave.  I’ve found it was good advice when traveling, and is probably good advice for business and life as well.  There are times when you’ll be nervous about a deal, just because it’s larger or different than you’re used to.  But if you’re honestly getting a bad vibe about doing business with someone, make sure the safe-guards are in place that they won’t be able to “take the money and run” (and don’t be afraid to just not do business with them if they fight you when you try to put those safe-guards in place).

Have you ever had someone gain your trust, then steal from or defraud you?